By Chris Bruce
Banking groups representing more than 95 percent of the nation’s 5,850 banks want to join a case they said could expand and distort federal fair lending laws ( United States v. KleinBank , D. Minn., 17-cv-00136, motion filed 6/5/17 ).
The lawsuit, filed by the Justice Department seven days before President Donald Trump took office, could test the new administration’s willingness to press ahead with a fair lending enforcement program much-criticized by bankers during the Obama years.
The case involves KleinBank, a Minnesota-chartered subsidiary of Klein Financial, Inc., a privately held financial holding company based in Chaska, Minn. The Justice Department alleged that from 2010 until at least 2015, KleinBank avoided serving specific credit needs in several majority-minority census tracts.
KleinBank itself asked the U.S. District Court for the District of Minnesota to dismiss the suit June 5. The bank, which has offices in three Minnesota locations — Big Lake, Buffalo, and Chanhassen — said it’s being accused of redlining because it hasn’t extended its presence into Minneapolis and St. Paul.
“This stunning allegation is devoid of legal support, as the Department of Justice lacks the authority to direct a modest-sized community bank to expand into all of a major metropolitan area it has never served nor sought to serve,” the bank said in a brief.
Bank groups made their filing later on June 5, asking Judge Richard H. Kyle for permission to file a brief in the case, The Minnesota Bankers Association, joined by the American Bankers Association, the Independent Community Bankers of America, and 40 state banking groups, said the Justice Department’s lawsuit “would have the Court adopt a new, expansive definition of redlining.”
That new definition disregards current interagency examination procedures, the fair lending laws themselves, regulations relied upon by bank regulators and bank compliance officers, as well as existing evidence standards for possible violations, said the brief, which is subject to court approval before being formally included in the case.
“Changing the redlining definition and evidentiary standards in that manner would immediately subject banks all across the country to new legal, regulatory and reputational risk,” the groups said.
KleinBank is represented by John W. Lundquist of Fredrikson & Byron in Minneapolis.
To contact the reporter on this story: Chris Bruce in Washington at email@example.com
To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)